STOCK MARKET

Analysing the international stock markets

Analysing the international stock markets

a) Since the stated accumulation level of 2,000 on the SSEC the market has risen to 2,940 which represent a gain of 47% in less than 9 months. Whilst many 'perma-bears' continue to correctly point to the collapse in world trade i.e. exports down 40%, imports down 25%. However the performance of the Chinese economy and stock market shows that China has offset the collapse in world trade by means of a huge stimulus package of $600 billion so as to prevent a downward economic spiral from taking hold.

Those that continue to be negative on China's prospects due to the crash in exports, FAIL TO RECOGNISE THE FACT that China is sitting on more than $2 trillion of reserves that despite the economic crisis continues to grow by $400 billion per year(Spremann, Lang, 2006). Therefore the $600 billion stimulus whilst huge by western standards is NOT FINANCED by debt but by CASH-FLOW, which is the fatal mistake countries such as Britain are making, i.e. borrowing for consumption.

Now that China has gotten a taste for spending spree's, imagine a China that can sustain annual economic growth rates of at least 7% and more probably averaging more than 10% per annum for the next TEN YEARS! ALL on the basis of a STRONG annual cash-flow taking up the slack whenever there is a blip in the global economy. This implies that the outlook for Chinese stocks remains immensely attractive even after the 47% run up, which implies that it can no longer be really called a stealth bull market, but rather a bull market proper that investors should take seriously note of.

The economic stimulus package AND communist party dictates such as ordering state and private factories that produced goods for exports to now produce goods for domestic consumption, and illustrated by the THREE NO's policy ensures that the global recession does NOT impact on Chinese consumers who in fact have been given the green light to embrace consumption.

* No Redundancies

* No delays in salary payments

* No Salary Cuts

Chinese statistics imply a successful bounce back in the economy which is now projected to grow by 10% this year. Off course, as with all governments the official statistics are not 100% accurate, but still we are looking at Chinese growth for 2009 of at least 7%, with an increasing shift away from the export model to a consumer model ensuring that the Chinese long-term mega-trend has many years to run and therefore those that accumulated during the global crisis look set to reap continuing huge rewards especially on an exchange rate adjusted basis.

Asian Stealth Stocks Bull Markets

China forms part of an Asian Axis of Growth that has seen stock markets soar right across the region across all of the major players from the developing Indian market up 100%, to the more developed South Korean market up 60%(www.imf.org). To make sure you do not miss out on the asian stocks bull markets see ...